AFFLUENCE

1) GLOBAL ECONOMIC CONDITIONS IMPACTING PERFORMANCE OF YOUR COMPANY:

Global growth for 2015 was projected at 3.1 percent, 0.3 percentage point lower than in 2014, and 0.2 percentage point below the forecasts in the July 2015 World Economic Outlook (WEO) Update. Prospects across the main countries and regions remain uneven. Relative to last year, the recovery in advanced economies was expected to pick up slightly, while activity in emerging market and developing economies was projected to slow for the fifth year in a row, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries. In an environment of declining commodity prices, reduced capital flows to emerging markets and pressure on their currencies, and increasing financial market volatility, downside risks to the outlook have risen, particularly for emerging market and developing economies. Global growth remained moderate—and once again more so than predicted a few months earlier. Although country-specific shocks and developments play a role, the persistently modest pace of recovery in advanced economies and the fifth consecutive year of growth declines in emerging markets suggest that medium-term and long-term common forces are also importantly at play. These include low productivity growth since the crisis, crisis legacies in some advanced economies (high public and private debt, financial sector weakness, low investment), demographic transitions, ongoing adjustment in many emerging markets following the postcrisis credit and investment boom, a growth realignment in China—with important cross-border repercussions—and a downturn in commodity prices triggered by weaker demand as well as higher production capacity.

In India, near-term growth prospects remain favorable, and the decrease in the current account deficit has lowered external vulnerabilities. The faster-than expected decline in inflation has created space for considering modest cuts in the nominal policy rate, but the real policy rate needs to remain tight for inflation to decline to the inflation target in the medium term, given upside risks to inflation. Continued fiscal consolidation is also essential, but it should be more growth friendly (tax reform, reduction in subsidies). With balance sheet strains in the corporate and banking sectors, financial sector regulation should be enhanced, provisioning increased, and debt recovery strengthened. Structural reforms should focus on relaxing long-standing supply constraints in the energy, mining, and power sectors. Priorities include market based pricing of natural resources to boost investment, addressing delays in the implementation of infrastructure projects, and improving policy frameworks in the power and mining sectors. (Source IMF)

As explained in the Directors’ Report of financial year 2013-14, Government of India had notified revised Central Pollution Control Board (CPCB) norms, which has become effective from July 1, 2014.Despite of this change, the Company had managed to create positive impact on Performance and Profits of Company. Financial Year 2015-16 proved to be good year for the financial achievements.

Power Generating Sets Business:

Powerica executes approximately 1100 MW power with Cummins diesel engines during the year under the review, with the supply & commissioning of over 6129 DG Sets. Cummins, a leader in engine manufacturing is associated with Powerica since its inception. Currently, Powerica markets the entire range of engines manufactured by Cummins from 7.5kVA to 3000kVA in Diesel and Gas.

Wind Power Generation Business:

Powerica’s Wind Division is committed to responsible growth, especially as it opens the doors for Wind Project Development Business. As on the date of this report, Company holds a Government waste land bank of around 150MW out of the identified 260 MW potential wind sites in Khambhaliya District of Gujarat State.

We are doing Balance of Plant maintenance of 21 Wind Turbine Generators (WTGs) located in the state of Gujarat (11 WTGs in Jangi & 9 WTGs in Goinj & 1 WTG of other customer).

Wind Division is also doing Scheduling & Forecasting of Wind Data for 10 WTGs (9 WTGs of Powerica & 1 WTG of other customer) located in Goinj, Gujarat

Powerica Wind Division had also achieved ISO 9001:2015 certification along with ISO 14001:2015 (Environment Management) and ISO 18001:2007 OHSAS (Safety management).

 Performance Review

Performance Review for main business segments that Company operates, viz Power Generating Sets, Electricity Generation from Wind Turbine Generators and others is summarized below:    

Power Generating Set Business:

The power generating set business recorded gross revenue of Rs. 11,826.60 millions in 2015-16 as compared to Rs. 10,138.31 in 2014-15. This business was impacted by falling demand over all sectors.

Service Division

Service Division achieved a revenue of Rs. 1150.48 million (previous year Rs. 823.68 million) during the year under review. Service business will continue to focus on annual maintenance contracts, government projects and retail business

2) ELECTRICITY GENERATION FROM WIND TURBINE GENERATORS BUSINESS:

During the Financial Year 2015-16, Powerica Limited has generated upto 296 million units (kWh) of wind power from its 83 Wind Turbine Generators (WTGs), earning a revenue of approx. INR 1100 million from State Electricity Boards (SEB).

Wind power projects owned by the company as on 31st March 2016 are as under:

Carbon Benefit from Wind Power Projects

The Goinj project having capacity of 18 MW comprising 9 Wind Turbine Generators (WTGs), located in the state of Gujarat, got registered under Clean Development Mechanism (CDM) with United Nations Framework Convention on Climate Change (UNFCCC) and consequently the project is eligible to earn 42210 CERs (Certified Emission Reductions) per annum. From its 83 WTGs, Powerica is expected to earn 281,992 CERs in FY 2016-17

Generation Based Incentives

In 2009, the Ministry introduced a Generation Based Incentive (GBI) Scheme for wind power projects wherein wind power projects not availing the Accelerated Depreciation (AD) benefit are eligible for GBI incentive at the rate if Rs. 0.50 per unit of power fed to the grid subject to the ceiling of Rs. 1 Crore per MW.

From above mentioned twoof our projects, are GBI registered projects i.e. 22 MW and 18 MW in the state of Gujarat,Powerica earned a revenue of INR 48 million for financial year 2015-16.

New Source of Revenue - Powerica as a Developer for Balance of Plant

During the financial year 2013-14, the company entered into an agreement with Vestas Wind Technologies India Pvt. Ltd for supply, erection and commission of 15 Wind Turbine Generators (WTGs), model V100-2MW for its project located in the state of Gujarat. Out of this, 9 WTGs (18 MW) were commissioned during the last financial year i.e 2014-15.

During the year under review Powerica amended the above agreements wherein Company not only exercised its right for 14 Additional WTGs but also upgraded the model from V100-2MW to V110-2MW for all 20 WTGs (Balance 6 plus 14 new).

The Company has successfully diverted the order for 10 WTGs out of said 20 WTGs to IPP buyers. Commissioning of these Turbines are planned for first semester of the coming year. Your company has successfully managed to obtain the order for these 10 WTGs for doing the Balance of Point (BoP) and expect to earn a revenue of 325 Million. The execution of remaining 10 WTGs shall be completed during the ongoing financial year, 2016-17 depending on the favorable wind policy in the state of Gujarat. Further Company has identified potential Customers for around 100 MW and expecting order confirmation in FY 2016-17.

The company has formed an additional SPV (special purpose vehicles) to develop 200 MW wind power project in the state of Gujarat

3) CONSOLIDATED FINANCIAL STATEMENT

In accordance with the Companies Act, 2013 (“the Act”) and Accounting Standard (AS) - 21 on Consolidated Financial Statements, the consolidated financial statement is provided in the Annual Report.

4) AUDITORS:

M/s. Kapoor & Parekh Associates, Chartered Accountants, Statutory Auditors hold office until the conclusion of the ensuing Annual General Meeting and are recommended for reappointment to audit the accounts of the Company for the Financial Year 2016-17.

The Company has received a certificate from M/s. Kapoor and Parekh Associates, Chartered Accountants, Mumbai to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3) (g) of the Companies Act, 2013, and that they are not disqualified for re-appointment.

There are no Qualifications in Audit reports by Statutory Auditors for the financial year 2015-16.

5) COST AUDITOR:

Board of Directors of the Company had appointed M/s N. Ritesh& Associates, Cost Accountants as Cost Auditors to audit the cost accounts of the Company for financial year 2015-16 in accordance with provision of Section 148 and Rules made thereto of the Companies Act, 2013.

The Cost Audit Report for the Financial Year 2014-15 was filed on the Portal of Ministry of Corporate Affairs on September 24, 2015.

6) EXTERNAL COMMERCIAL BORROWING:

Company had successfully availed of External Commercial Borrowings (ECB)of USD 20 Million in October 2011 from Citi Bank & USD 20 Million from Standard Chartered Bank in March 2013.

In the Financial Year 2014-15 it had also availed of USD 15 Million from Standard Chartered Bank. During the year under the review No ECB’s was availed. As on March 31, 2016 the total outstanding’s for External Commercial Borrowings are as follows:

1)     Citi Bank - USD 5 Million

2)     Standard Chartered Bank - USD 24.06 Million

All the External Commercial Borrowings are for funding of wind power generation   business of the Company.

7) SHARE CAPITAL:   

The paid up Equity Share Capital of the Company as on 31 March 2016 was Rs.  84,246,156.

There has been no change in the Equity Share Capital of the Company during the year.

8) ACKNOWLEDGEMENTS:

The directors thank the Company’s employees, customers, vendors, investors and academic institutions for their continuous support.

The directors also thank the government of various countries, government of India, the governments of various states in India and concerned government departments / agencies for their co-operation.

The directors appreciate and value the contributions made by every member of Powerica Limited.    

In pursuance of Section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) The Directors had prepared the annual accounts on a going concern basis; and

(e) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Since the Company is involved in the business of manufacturing / assembly of generating sets, which are energy saving devices, it does not have much scope of conservation of energy. 

The information of Foreign Exchange Earning and Outgo is contained in notes to accounts.

Since the Company is involved in the business of manufacturing / assembly of generating sets, which are energy saving devices, it does not have much scope of technology absorption. 

Dear Members,

The Board of Directors hereby presents the 32ndAnnual Report on the business and general operations of your Company along with the financial statements for year ended March 31, 2016.